For Those Unemployed from Cap and Trade, Help is on the Way…For 1.5 % of You

It’s no secret the Waxman-Markey cap and trade legislation to reduce carbon dioxide emissions is a jobs killer. Heritage Foundation economists found that over a 2012-2030 timeline, job losses average over 1.1 million. By 2035, a projected 2.5 million jobs are lost below the baseline (without a cap and trade bill). But don’t take our word for it. The Black Chamber of Commerce and The Brookings Institution are projecting catastrophic job losses as well.

It’s all right, though, because the government has you covered. Sort of. It’s called Climate Change Worker Adjustment Assistance (CCWAA). Translation: It’s unemployment insurance for those who are going to lose their jobs because of Waxman-Markey. It provides “156 weeks of income supplement, 80 percent of their monthly health care premium, up to $1,500 for job search assistance, up to $1,500 for moving assistance, and additional employment services for skills assessment, job counseling, training, and other services.”

The problem is, the numbers don’t add up. A recently released CBO report calculates the outlays for the CCWAA to be $4.3 billion over 9 years (2011 through 2019). Using $35,507 as the average income per person and $9,968 as the average health care cost, the annual compensation cost to a worker displaced by Waxman-Markey would be $32,829. Combining those two estimates, CBO suggests that the program would cover, on average, 14,553 displaced workers each year.

The Heritage Foundation estimates that between 2011 and 2019, an average of 987,440 Americans will be out of work because of Waxman-Markey. Using CBO’s guidelines, only one out of every 68 displaced workers would receive benefits. That’s 1.47 percent of displaced workers.

The legislation caps the benefits based on auction-allowance revenue formula – that limit cannot be exceeded. According to the legislation, “The Secretary shall promulgate rules to ensure that this spending limit is not exceeded. Such rules shall provide that workers who receive any of the benefits described in section 426 receive full benefits, and shall include the establishment of a waiting list for workers in the event that the requests for assistance exceed the spending limit.”

Let’s suppose the assistance program goes into effect on October 1, 2011 and the average annual job losses occur equally throughout the year. If you lost your job on between October 1st and October 5th, you would be receiving benefits – otherwise, you would be placed on a waiting list.

With so many people affected by cap and trade and so few receiving assistance, calls to fully fund the program would commence (think No Child Left Behind). If the government covered every displaced worker, the total cost from 2011 to 2019 (CBO’s time window) would be $291 billion – more than $32.4 billion per year. From 2011 to 2035, Heritage estimates average annual unemployment to increase by 1.14 million people, which would cost an average of $37.7 billion per year. The 25-year cost would be $942.1 billion.

For the purposes of this analysis, we did not include other costs associated with the program. These include: administrative costs, assistance to enable individuals or groups to file for benefits, written notice to workers, published notices, worker training costs via voucher program, commuting expenses to training, one-time $1,500 job search allowance, up to $1,500 relocation assistance, on-the-job training, and other miscellaneous expenses. These would undoubtedly add to the government’s tab.

It’s worth noting the job losses come after accounting for the green jobs policymakers are adamant about creating. Surely industries will hire people to build new windmills and solar panels; of course, most of these jobs will come at the taxpayer’s expense, since the government subsidizes renewable energy projects. In any event, cap and trade is a disguised energy tax that will significantly drive up energy prices. The general rule of thumb in economics is you tax something if you want less of it. But the problem is, our economy runs on energy; in essence, cap and trade is also taxing the economy and reducing its growth potential. A slower economy translates to higher unemployment even after incorporating green job creation.

Americans displaced by global warming legislation may want to try their hand at the lottery; they may have better odds of making ends meet.

Join The Discussion

Thank you for explaining how Cap and Trade will destroy jobs. Cap and Trade “would be the equivalent of an atomic bomb directed at the U.S. economy—all without any scientific justification,” says famed climatologist Dr. S. Fred Singer. It would significantly increase taxes and the cost of energy, forcing many companies to close, thus increasing unemployment, poverty and dependence.

We pray that honest leaders – both Democrat and Republican – are able to save us from Obama's criminal ACES Act (cap-and-trade) scam.

You overlook something very important: energy prices are going up with or without Cap and Trade. It takes water — billions of gallons — to produce gas, coal, and nuclear energy (although not solar). Water is going to be the next great scarcity we face. Also, BP just announced we have four decades — not centuries mind you — of oil reserves (see Economist.com). Thus, energy prices WILL go up as the scarcity and limits of our economy and environment come more into view.

Given that's the reality, it is better to start NOW the transition to an economy where energy costs are higher. The Cap and Trade is a model to do that, while what you speak of, namely neoclassical economics of the market solving everything, well, is simply discredited given the market didn't account for the current financial crises, the spiraling costs of healthcare, Global Warming, to name just a few.

Let's have a serious and genuine debate about what we HAVE to do to make the transition to a new economy, instead of quibble with details as you do in this article.

Surely there must be away to create a means to aleave us of the cost of oil and supply another sorse of energy. I fear the cost accounding to the cap and trade as it stands will be to costly and no time to recover in the short years. Let use the resourses we have using both. And what I have been reading about globle warming tells me that there is not enough facts to prove it, and actually the co2 level is steady and mostly level thoughout the years. And many scientist strongly disagree. It is a shame that there is not a debate concerning greenhouse, open to the public. And see what actually is right. Leaving politics out of it.

The cap and trade bill taxes consumers twice: once for the allowances that are required, and once more to actually install technology to address greenhouse gas emissions. Further, the allowances are not allocated in the same way acid rain (SO2) allowances were allocated. With the Waxman bill, allowances can be traded by financial instutions (you know, the same folks that brough us derivatives and the current financial mess). If we want to reduce greenhouse gas emissions, then a cap is sufficient and can be used within the exisiting regulatory framework. However, for some, this has a 'fatal flaw' in that the states retain regulatory power…!

Oh, one other thing: With the SO2 allowances, commercial technology existed to reduce SO2 emissions. We do not currently have such technology available, so expect the cost of allowances to increase dramatically until such a time as the technology is available. In the meantime, natural gas-fired powerplants will be called on to fill the void (good luck getting new hydro or nuclear approved). This will increase the natural gas demand, so those of us who use gas for home heating can expect our gas bill to rise as well. Renewable power has a very important role to play, and is welcomed, but it is still only a fraction of the total power supply. Note also that gas-fired generation is required to support some renewable generation (when the wind doesn't blow or at night).

Currently, coal accounts for about half of the power generation in the US, and we have hundreds of years of proven reserves. In terms of national security, it makes sense to utilize the resources we have, and not be held hostage to the whims of foreign powers. If we as a nation do decide to migrate from a carbon-based economy, we should be quite clear about what the costs and what the benefits will be.

One guess as who will ultimatly pay for cap & trade (hint: look in the mirror). Will power cost us four times current rates? eight? More? And what will this shock do to an already weak economy?

Aaron – you are correct that energy prices will increase occur even if we do not pass Waxman-Markey or some other variation of an energy tax. The Heritage analysis measures the cost increase above and beyond that baseline. Interestingly, many on the left believe health care is a fundamental right that should be cheap (or free). All too often, they view cheap energy, which stimulates our economy and produces high standards of living, as an evil that must be rationed or made prohibitively expensive. A serious and genuine conversation begins with an honest cost-benefit analysis. To date, not even the proponents of Waxman-Markey have produced an analysis that suggests it will have a measurable impact on our changing climate.

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